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Corporate Governance

Senior Management of OTP Bank and Executive Members of the Board of Directors

OTP Bank Annual Report �006

Dr. István GresaDeputyCEO

CreditApprovalandRisk

ManagementDivision

Dr. Zoltán SpéderViceChairmanoftheBoardof

Directors,

DeputyCEO*

StrategicandFinancialDivision

Dr. Sándor CsányiChairman&CEO

Csaba LantosMemberoftheBoard

ofDirectors,

DeputyCEO

RetailDivision

Géza LenkMember of the Board

of Directors,

Deputy CEO

Dr. Sándor Csányi (54) has

served as Chairman and Chief

Executive Officer of OTP Bank

since 1992 and is responsible for

the strategy and overall operations

of the Bank.

Dr. Csányi has held several other

senior positions in the banking

sector, including head of

Department at hungarian Credit

Bank ltd. from 1986 to 1989

and Deputy Chief Executive

Offi cer at K&h Bank from 1989 to

1992. Before that, he worked at

the revenue Directorate and at

the Secretariat of the hungarian

Ministry of Finance and as head

of Division at the hungarian

Ministry of Food and agriculture.

Dr. Csányi gained a degree from

the Financial and accounting

College in 1974 and from the

Budapest University of Economics

in 1980. he is a financial

economist, a certified price

analyst and a chartered

accountant. he is a member of

the board of Europay and of MOl,

and holds a seat on the

management committee of the

hungarian Banking association.

he owned 200,000 OTP ordinary

shares as of December 31, 2006

(while the total number of OTP

shares owned by him directly or

indirectly was 3,302,000).

Dr. Zoltán Spéder (43) has

been a member of the Board

since 1991, has served as the

Vice Chairman of the Board

since 1995, and as the Chief

Financial Officer and Deputy

Chief Executive Officer of the

Bank since 1996. From 1987

to 1990 he was employed at

the Financial research Institute

as a research fellow in banking

and corporate finance.

Between 1991 and 1992

Dr. Spéder was adviser to the

Minister of Finance. Dr. Spéder

has a PhD and MSc from

the Budapest University

of Economics.

he owned 0 OTP ordinary

shares as of December 31,

2006 (while the total number

of OTP shares owned by him

directly or indirectly was

1,548,400).

*until January 8, 2007

Dr. István Gresa (54) has

served as Deputy Chief

Executive Officer of the Credit

approval and risk Management

Division of OTP Bank since

March 1, 2006. Dr. Gresa

graduated from the College of

Finance and accounting in

1974 and from the Budapest

University of Economics in

1980, where he went on to

gain a PhD in 1983. he

worked at Budapest Bank from

1989 to 1993. he has been

employed by OTP Bank from

1993, initially as director for

Zala County and then, from

1998, as managing director

of the West Transdanubian

region.

he held 63,758

OTP ordinary shares

as of December 31, 2006.

Mr. Csaba lantos (45) has


since 2001. he has served as

Deputy CEO of OTP Bank since

2000. he was employed at

Budapest Bank as a bond

dealer from 1986. after that

he was head of Securities

Trading at Creditanstalt

Securities ltd. until 1994 and

Deputy CEO there until 1997.

at the same time he served

as managing director of

Creditanstalt Securities

Investment Fund Management

ltd. Between 1997 and 2000

he was the CEO and Chairman

of the Board of Ca IB

Securities.

he has been a member of the

Council of the Budapest Stock

Exchange since 1990 and

Chairman of the Board of the

Central Clearing house and

Depository ltd. (KElEr) since

1993.

he held 80,116

OTP ordinary shares


Mr. Géza lenk (60) has been

a member of the Board from

2001 until april 28, 2006.

he has served as Deputy CEO

of OTP Bank since 2001, from

March 2006 as advisor to the

chairman, earlier with

responsibility for managing the

Bank’s Credit approval and risk

Management Division.

Previously he worked at the

National Bank of hungary,

and was CEO of the General

Enterprise Bank until 1988.

after that he served as

Chairman & CEO of K&h Bank,

until 1995. From 1996

Mr. lenk was the Vice

Chairman and Deputy CEO

of Trigon Bank in Vienna.

From 1998 to 2000 he was

the head of the MKB leasing

and Finance group, and

Chairman & CEO

of the company reorg rt.

Mr. lenk is a graduate

of the Budapest University

of Economics and the

International Banker’s School

in london.

he held 100,000 ordinary


2006.

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Ákos TakátsDeputyCEO*

ITandBankOperations

Division

Dr. Antal PongráczMemberoftheBoardof

Directors,

DeputyCAO

StaffDivision

Gyula PapDeputyCEO*

ITandLogisticsDivision

Dr. László UrbánDeputyCEO*

StrategicandFinancial

Division

László WolfDeputyCEO

CommercialBankingDivision

Mr. Gyula Pap (49) has been

a Deputy CEO at the OTP Bank

since 2001, with responsibility

for managing the IT and

logistics Division. Mr. Pap

earned a degree in electrical

engineering from Kálmán

Kandó Electrical Engineering

College in 1980 and

a post-graduate degree in IT

engineering from the College

of Foreign Trade in 1989.

he has been employed at

OTP Bank since 1982, where

he has held a variety of

positions in various areas

of information technology.

From 1994 to 2001 he was

the Managing Director of the

IT Operations Directorate.

he held 372,820 OTP ordinary

shares as of October 1, 2006.

*until October 1, 2006

Dr. antal Pongrácz (61) has


since 2002. he has served as

Managing Director of OTP Bank,

and has been Deputy CEO

since 2001. From 1969 he

worked as an analyst at

‘Petrolkémiai Vállalat’, and then

as a group manager at the

revenue Directorate. From

1976 he served at various

departments of the Ministry

of Finance, as a manager. after

that, he was deputy Chairman

of the State Office for Youth

and Sports. From 1988 to

1990 he served as the first

Deputy CEO of OTP Bank.

he was CEO and later

Chairman & CEO of the

European Commercial Bank ltd.

until 1994. In that year he was

appointed Chairman & CEO

of Szerencsejáték rt. and then

went on to serve as CEO

of hungary’s flagship airline,

Malév. Dr. Pongrácz has

a PhD and MSc from the

Budapest University

of Economics.

he held 260,000

OTP ordinary shares


Ákos Takáts (47) graduated

at the University of horticulture

and Food Industry in 1982,

then he gained a degree in

engineering at the same

university. he has been

working in the banking sector

since 1987. Between 1989

and 1993 he worked for

Investbank as an administrator.

In 1993 he was employed

as a Deputy head of

Department by OTP Bank,

from 1995 he worked

as a head of IT Development

Directorate. Since October 1,

2006 he has served as Deputy

CEO of OTP Bank,

and the head of IT and Bank

Operations Division.



2006.

*from October 1, 2006

Dr. lászló Urbán (48) has

been a Deputy CEO at the

OTP Bank since January 15,

2007. he graduated from the

Budapest University of

Economics in 1982. he has

been working in the financial

sector since 1995. he worked

in Washington as an employee

of World Bank, later he

became the Planning and

Controlling Director of aBN-

aMrO hungary. Between

1998-2000, he worked as

Deputy-CEO of Postabank;

between 2000-2005 he was

responsible for global product

development at Citigroup New

York; from 2005, he was

Director of the National Bank

of hungary.

he held no OTP ordinary

shares as of January 15, 2007.

*form January 15, 2007

Mr. lászló Wolf (47) has

served as Deputy CEO of OTP

Bank, with responsibility for

managing the Commercial

Banking Division, since 1994.

Mr. Wolf gained a degree from


of Economics in 1983. From

1983 he was employed for

8 years at the National Bank

of hungary, in the Division

of International Banking

relations. From 1991 to 1993

he was head of Treasury at

BNP-Kh-Dresdner Bank in

Budapest, and from april 1993

to 1994 he served as Director

of Treasury at OTP Bank.



2006.

�55

Non-executive Members of the Board of Directors of OTP Bank

Dr. Tibor BíróMemberoftheBoardofDirectors

HeadofDepartment

BudapestCollegeofBusiness

Péter BraunMemberoftheBoardofDirectors

ElectricalEngineer,

FormerDeputyCEO

OTPBankPlc.

Dr. István KocsisMemberoftheBoardofDirectors

CEO

HungarianPowerCompaniesLtd.

Mihály BaumstarkMemberoftheBoardofDirectors

Chairman&CEO

CsányiVineryLtd.

OTP BANK Annual Report �006

Mr. Mihály Baumstark (58) has

been a member of OTP Bank’s

Board since 1999 and is currently

the Chairman & CEO of Csányi

Vinery ltd., a post he has held since

1999. Mr. Baumstark holds degrees

in agricultural engineering and

agricultural economics. Mr. Baumstark

was employed between 1978 and

1989 at the Ministry of Food and

agriculture, with his last position being

Deputy head of accounting.


shares as of December 31, 2006.

Dr. Tibor Bíró (55) has been a

member of OTP Bank’s Board since

1992, and is currently head of

department at the Budapest College

of Business, where he has taught

since 1982. Mr. Bíró has a degree in

economics from the Budapest

University of Economics and was head

of the Financial Department at

Tatabánya City Council from 1978

to 1982. Mr. Bíró is a registered

auditor and a member of the

Budapest Council of the hungarian

Chamber of auditors.

he was the owner

of 46,000 OTP ordinary shares


Mr. Péter Braun (71) was a Deputy

Chief Executive Officer and head of

the IT and logistics Division at OTP

Bank from 1993 until 2001 when he

was retired. he has been a member

of the Board since 1997. Mr. Braun

earned a degree in electrical

engineering at the Budapest Technical

University. Between 1954 and 1989

Mr. Braun was employed at the

research Institute for Electrical Energy,

with his last position being head of

Department. after that, Mr. Braun was

the Managing Director of K&h Bank,

working in its Computer and

Information Centre. Mr. Braun is also

a member of the Board of Directors

of GIrO rt.

he held 651,905 OTP ordinary shares


Dr. István Kocsis (55) has been a

member of OTP Bank’s Board since

1997. Dr. Kocsis is a graduate of the

Budapest Technical University and

between 1991 and 1993, worked at

the Ministry of Trade and Industry as

head of Department and later as

Deputy Undersecretary of the

hungarian State. he served as Deputy

CEO and subsequently as acting CEO

at ÁPV rt. from 1993 to 1996.

Between 1996 and 1997 he was

Deputy CEO of ÁPV rt. later,

Dr. Kocsis was head of Division

at rWE Energie aG., General Director

at ÉMÁSZ rt., and the CEO of Paks

Nuclear Power Plant. From 2005 he

has been CEO of hungarian Power

Companies ltd. (MVM rt.).



�56


Dr. László UtassyMemberoftheBoardofDirectors

Chairman-CEO

OTPGaranciaInsuranceLtd.

Dr. Sándor PintérMemberoftheBoardofDirectors

Chairman&CEO

CIVILBiztonságiSzolgálatLtd.

Dr. József VörösMemberoftheBoardofDirectors

GeneralDeputyRector

PécsUniversity,

FacultyofBusinessandEconomics

Dr. Sándor Pintér (59) has been

a member of the Supervisory Board

from 2003 until 2006. From april 28,

2006 he is a member of the Board of

Directors. Dr. Pintér has a degree from

the Police Officer Training College and

gained a law degree from ElTE

University in Budapest in 1986. From

1970 he worked for the home Office.

In December 1996 he retired from his

position as police superintendent.

From 1998 to 2002 he served

as home Secretary of the hungarian

republic. Between 1997 and 1998

he was a member of the Board

of Directors at OTP Bank.

he was the owner of 25,350

OTP ordinary shares

as at December 31, 2006.

Dr. lászló Utassy (55) has been

a member of OTP Bank’s Board since

2001. he has served as Chairman

& CEO of OTP Garancia Insurance ltd.

since 1996. From 1978 to 1995 he

was employed at the State Insurance

Company and at ÁB-aEGON rt.

Dr. Utassy has a law degree from

ElTE University in Budapest and has

a degree in economics from the

Budapest University of Economics.

he is the chairman of the association

of hungarian Insurance Companies.



Dr. József Vörös (56) has been

a member of OTP Bank’s Board since

1992. Currently Dr. Vörös is the

General Deputy rector at the

University of Pécs, where he has

taught since 1994. Dr. Vörös gained

a degree in economics from the

Budapest University of Economics

in 1974 and holds a PhD and DSc

from the hungarian academy of

Sciences, which he obtained in 1984

and 1993 respectively. Dr. Vörös was

Dean of the Faculty of Business and

Economics at the Janus Pannonius

University from 1990 to 1993.

he attended a course in management

for senior executives at harvard

Business School in 1993.

he held a total of 115,000

OTP ordinary shares


�57

Members of the Supervisory Board of OTP Bank

Dr. Gábor HorváthMemberoftheSupervisory

Board

lawyer

Dr. Gábor NagyViceChairmanofthe

SupervisoryBoard

HeadofCodificationGroup

MinistyofFinance,Accounting

Division

Tibor TolnayChairmanoftheSupervisory

Board

Chairman&CEO

MagyarÉpítôkLtd.

Antal KovácsMemberoftheSupervisory

Board

ManagingDirector

OTPBankPlc.,

SouthTransdanubianRegion

Klára VécseiMemberoftheSupervisory

Board

DeputyManagingDirector

OTPBankPlc.,

NorthernHungaryRegion


Mr. Tibor Tolnay (56) has been

Chairman of the Supervisory

Board since 1992. Mr. Tolnay

is currently Chief Executive

Officer of Magyar Építôk ltd.,

a position he has held since

1972. Mr. Tolnay earned

a degree in architecture from

the Technical University

of Budapest and a degree

in economics from the

Budapest University

of Economics.

he owned 80,580

OTP ordinary shares


Dr. Gábor Nagy (70) has been

a member of the Supervisory

Board since 1991 and Vice

Chairman since 1992.

Dr. Nagy is a registered

auditor with a degree from


of Economics. From 1974

to 1977, he worked at the

Institute for Further Education

at the Ministry of Finance.

Since 1977 Dr. Nagy has

worked in a variety of positions

in the accounting division

of the hungarian Ministry

of Finance and is currently

the head of the accounting

Division.

he owned 130,000

OTP ordinary shares


Dr. Gábor horváth (51) has

been a member of the

Supervisory Board since 1995.

he has a law degree from ElTE

University in Budapest. From

1983 to 1986 Dr. horváth

worked for the hungarian State

Development Bank. From

1986 to 1990 he worked for

a legal co-operative office.

Since 1990 he has worked

as a private, independent

lawyer, and his clients include

the hungarian Ministry

of Finance, the hungarian State

Institute for research and the

Municipality of Budapest.

he held 30,000

OTP ordinary shares


Mr. antal Kovács (54) has

been a member of the

Supervisory Board since 2004.

Mr. Kovács has a degree from

the Budapest University of

Economics. he began his

career at K&h Bank, and was

a branch manager there from

1993 to 1995. From 1995

he was employed by OTP Bank

as county director, and in

1998 he was appointed

regional director of the South

Transdanubian region.



2006.

Ms. Klára Vécsei (55) is

a member of the Supervisory

Board since 1991 and is the

Deputy Managing Director

of the OTP Bank’s Northern

hungary region. Ms. Vécsei

joined the bank in 1970 and

has held a variety of senior

positions, including Deputy

head of the accounting and

Controlling Department, and

Chief accountant. She received

a degree in economics from

the Budapest University of

Economics.

She held 3,000 OTP

ordinary shares


�58


Information for Shareholders

General company data

Date of foundation:

December 31, 1990, registered by the

Metropolitan Court of Budapest as Court

of registration on October 28, 1991 under

company registration number 01-10-041585.

The latest Bylaws may be requested from the

company or may be downloaded from the

Bank’s website.

Legal predecessor:

Országos Takarékpénztár, founded March 1, 1949

Registered head office of OTP Bank Plc.:

h–1051 Budapest, Nádor utca 16.

Telephone: (+36-1) 473-5000

Fax: (+36-1) 473-5955

Share capital:

OTP Bank’s share capital as at December 31,

2006 was hUF 28,000,001,000, consisting

of 280,000,000 ordinary shares of nominal

value hUF 100 each, and 1 voting-preference

share of nominal value hUF 1,000.

Ownership structure as at December 31, 2006: Shareholder Ownership shareDomestic shareholders State 1 voting-preference share

State budgetary organisations 0.3%Managers and employees 3.0%

OTP Bank Plc. 0.8%Other domestic investors 8.3%

Foreign shareholders Foreign investors 87.6%Total 100.0%

Stock exchange listing

The ordinary shares of OTP Bank Plc. are

listed on the Budapest Stock Exchange under

category ‘a’, and the global depository receipts

(GDrs) representing the ordinary shares that

are traded abroad are listed on the luxemburg

Stock Exchange. (1 GDr represents to 2

ordinary shares.) regulation S GDrs are traded

on the london SEaQ International, and rule

144a GDrs are traded in the POrTal system.

The custodian bank for OTP GDrs is the Bank

of New York, and the safekeeping bank is

OTP Bank Plc. (Stock exchange symbol for

OTP Bank shares: OTP, reuters: OTP.BU)

Participation and voting rights at the General Meeting

Shareholders may exercise their right of

participation and their voting rights at the General

Meeting in person or by proxy. The letters

of proxy must be set forth in a notarised deed

or a private document of full probative force.

In the event that a shareholder is represented

at the General Meeting by its legal representative

(e.g. director, managing director, mayor etc.),

the deed issued by the court or court of

registration concerning the right of representation,

or a certificate testifying to the election of

the mayor, must be presented at the venue

of the General Meeting. The letters of proxy must

be handed over during the period and at the

location specifi ed in the invitation to the General

Meeting. If the letter of proxy was issued outside

hungary, it must satisfy, in terms of its form,

the statutory provisions pertaining to the

authentication or counter-authentication

of documents issued outside hungary.

Information on the subject can be obtained from

the hungarian representation offi ces abroad.

�59

Participation in the General Meeting and

exercising of voting rights is subject to the

following preconditions:

• the holder of the registered shares has been

effectively entered into the company’s Share

register;

• the voting right associated with ownership of

the shares does not violate the provisions of the

Company’s articles of association, which the

Company ascertains through a check following

receipt of an owner’s data reconciliation notice

from KElEr ltd.;

• with respect to participation in the General

Meeting and the exercising of voting rights

on the part of the organisation exercising

shareholders’ rights on the basis of the

voting-preference share (golden share) issued

in favour of the hungarian State, the general

rules apply, with the proviso that, in the case

of certain matters specified in the articles

of association of OTP Bank Plc., the consent

of the holder of the golden share is required

in order for the resolution to be passed;

• the rules on participation in the General Meeting

and the exercising of voting rights on the part

of GDr holders are contained in the Custody

agreement concluded between the Bank

of New York and OTP Bank Plc.

Dividend

OTP Bank Plc.’s General Meeting of april 27, 2007

passed a resolution to the effect that the extent

of the dividend to be paid in respect of the 2006

business year should be 144% of the nominal

value of the shares. The actual amount of dividend

payable to shareholders will be calculated and paid

in accordance with the Bank’s Bylaws.

The preconditions for payment of dividends

on the shares are as follows:

• the share ownership of the shareholder must

not violate the stipulations of act CXII of 1996

on Credit Institutions and Financial Enterprises;

• the owner of the shares must have been

effectively entered in the Share register

of OTP Bank Plc.;

• OTP Bank Plc. must have details available to it

that are suitable for identifying the shareholder,

based on the owner’s data reconciliation notice

required by KElEr ltd. by the initial date of

dividend payment and/or, subsequent to that,

based on the owner’s data reconciliation notice

sent to the company by the shareholder’s

account managing institution(s).

after registration in the Share register and an

examination of the Share register, OTP Bank Plc.

will transfer the dividend to the account manager,

or if the shareholder has, through the account

manager, so requested, to the shareholder’s

bank account. The payment of dividends on

shares traded in hungary is performed by the

designated branch offices of OTP Bank Plc.

Dividend payment for GDr holders is

performed through the Bank of New York.

Dividend payment date

The initial date of dividend payment is June 11,

2007. Private investors who have questions

regarding shares or dividends, or about

resolutions passed at the General Meeting,

should contact the Secretariat of OTP Bank Plc.

Telephone: (+36-1) 473-5162

Announcements

OTP Bank Plc. fulfils its disclosure obligations

related to corporate events and prescribed in act

CXX of 2001 in the publication Magyar Tôkepiac

[hungarian Capital Market] (until January 1,

2007), on the website of the OTP Bank Plc.

(from January 1, 2007) and on the website

of the Budapest Stock Exchange (www.bet.hu).

Investor relations

Institutional shareholders of OTP Bank Plc.

should contact the following address if they

require further information:

OTP Bank Plc. Investor Relations;

h–1051 Budapest, Nádor utca 16.

Telephone: (+36-1) 473-5460

Fax: (+36-1) 473-5951,

email: [email protected].

The address of the Bank’s

website is www.otpbank.hu.

OTP BANK Annual Report �006�60


Declaration on Corporate Governance Practice1

OTP Bank Plc.’s operation is in full compliance

with the applicable laws, supervisory provisions

and Budapest Stock Exchange (BSE)

regulations. The structure and conditions

of operation of the Company are contained

in the Company’s Bylaws.

Executive bodies

The executive body of the Company is the

Board of Directors. The scope of the Board

of Directors is defined in the effective laws,

the Company’s Bylaws, General Meeting

resolutions, and the Procedural rules of the

Board of Directors. The Procedural rules set

out the structure of the Board of Directors,

the tasks relating to the preparation,

implementation and drafting of resolutions

of its meetings, as well as all other issues

relating to the operation of the Board

of Directors.

The members of the Board of Directors are

elected by the General Meeting for a term of five

years. at present, the ratio of independent Board

members (3 persons) within the total number of

the Directors (11 directors) is 27%. (From april 28,

2006 the share of independend members of the

Board (4 persons) within the total number

of the Directors (11 persons) is 36%.)

all the obligations and prohibitions specified

for executive officers under act CXII of 1996

on Credit Institutions and Financial Enterprises

(Credit Institutions act) apply to the members

of the Board of Directors.

The Supervisory Board oversees the

management and business operation of the

Company. The Supervisory Board establishes

its own procedural rules, which are approved

by the General Meeting.

The members of the Supervisory Board are

elected by the General Meeting with a mandate

of three years. The ratio of independent

Supervisory Board members (4 persons) within

the entire Supervisory Board (6 persons)

is 67%. (The share of independent Supervisory

Board members (3 persons) within the entire

Supervisory Board (5 persons) is 60%.)

In order to avoid any conflict of interest,

the General Meeting may not elect members

of the Board of Directors or their close relatives

to the Supervisory Board. The rules applicable

to the appointment and recall of the employee

member of the Supervisory Board are defined by

the Works Council operating at the Company,

and the Company does not consider such

a member independent.

The Supervisory Board is responsible for the

management of the internal audit organisation

of the Company within the framework defined

in the Credit Institutions act. The Supervisory

Board exercises a preliminary right of consent

in respect of decisions relating to the

establishment and termination of the

employment, as well as definition of

remuneration of the managers and employees

of the internal audit organisation.

The Board of Directors holds meetings as

frequently as necessary, or at least on eight

occasions a year, while the Supervisory Board

must hold at least six meetings a year. In 2006,

eight Board meetings and seven Supervisory

Board meetings were held. a meeting must

also be called if a member of the Supervisory

Board or at least two members of the Board

of Directors, or the auditor, request it in writing,

1Based on the Corporate Governance recommendations (December 8, 2003) published by Budapest Stock Exchange

�6�


indicating the objectives and reasons

for the meeting.

The meetings of the Board of Directors and

Supervisory Board are recorded in minutes,

and all resolutions are documented.

The employer’s rights towards the executive

officers of the Company are exercised

by the Board of Directors through the chairman

and chief executive officer, with the proviso

that the Board of Directors must be notified

in advance for the appointment or withdrawal

of appointment of deputy CEOs.

The Board of Directors has prepared guidelines

for the evaluation of the work and the

remuneration of the management.

The Bank has launched a share option scheme

for the evaluation and encouragement

of management performance, based on the

performance of annual and medium-term

targets. The detailed conditions of the share

purchase program and the expectations

in terms of performance are approved

by the General Meeting of the Company.

The Board of Directors provides information

on the annual and medium-term targets

and their performance, representing

the basis of evaluation, at the annual General

Meeting. The Company has no separate

committees. Certain functions and tasks

of the audit Committee are performed by the

Supervisory Board and the independent internal

audit staff reporting to it based on the Credit

Institutions act, in line with the statutory

provisions applicable to financial institutions.

The tasks of the other committees are performed

by committees which may be and have been

established pursuant to the Company’s Code

of Organisation and Operation.

Audit

There is an independent internal audit

organisation at the Company, controlled

by the Supervisory Board within the framework

stipulated by the Credit Institutions act.

The independent internal audit group has

an annual audit plan, approved by the Board

of Directors or the Supervisory Board.

The independent internal audit group prepares

regular objective and independent reports on the

operation of risk management, internal control

mechanisms and corporate governance functions

for the Supervisory Board and the management.

The Supervisory Board exercises a preliminary right

of consent with regard to decisions relating

to the establishment and termination

of employment and to the determination

of the remuneration of the managers and

employees of the internal audit organisation.

The General Meeting has the right to elect

the business entity auditing the Company and to

approve the member of the audit company who

will be personally responsible for the audit.

The Board of Directors must notify the General

Meeting and Supervisory Board of the Company

about any other major assignment given to the

auditor. apart from that, in justified cases, the

Board of Directors, the Supervisory Board and

other committees of the Company may also

use the services of external consultants.

Disclosure

The Company discloses its information in strict

compliance with the provisions of act CXX

of 2001 on the Capital Market (Capital Market

act) and the applicable BSE regulations.

The Company also has an effective internal

disclosure policy.

The regulations indicated above assure full,

accurate and timely disclosure of all important

information that may affect the Company

or the price of the Company’s securities.

The Company discloses its business and

strategic targets for the current year and its

medium-term strategic plan at each annual

General Meeting. The Company discloses the

proposals prepared for the General Meeting in

compliance with the rules applicable to disclosure

as posted on the BSE website and with the

provisions of the relevant regulations of the BSE.

The Company discloses information about the

professional career of the members of the Board

of Directors, Supervisory Board and the

management on its website and in its annual

report in compliance with the effective legislation.

The proposal for the remuneration of the

chairman and members of the Board of

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Directors and chairman and members of the

Supervisory Board (monthly remuneration and

option scheme) is also part of the proposals

prepared for the General Meeting.

The Company has detailed risk management

regulations applicable to all types of risks

(liquidity, market and credit risks), which

are in compliance with the legal regulations

on prudent banking operations.

The annual report contains information on the

risk management practices of the Company,

the applied limits and compliance with them.

The Company has a detailed internal policy

for persons that qualify as insiders and potential

insiders, which is in full compliance with the

limits and prohibitions regulated in detail under

the effective provisions of the Capital Market

act. The Company discloses the transactions

of the members of Board of Directors,

Supervisory Board and management involving

the Company’s shares, in compliance with

the disclosure regulations, and indicates the

holding of these individuals in the Company

(number of shares) in its annual report.

The Company discloses the loans extended

to its executive officers, as well as the

enterprises in which it has an equity

participation, in its annual report.

Provisions against Money laundering

Money laundering means that services

of financial institutions is used in order

to conceal the true source of funds deriving

from criminal activity by the perpetrator,

or other individuals.

In order to avoid that OTP Bank Plc. be used

for Money laundering activities, we do

everything to establish the true identity of any

person/client demanding/applying for any

services from the bank, and OTP Bank Plc.

shall not perform any transaction order given

by a client who does not identify him/herself

pursuant to the legal regulations.

In accordance with Act No. XV of �00�

on the prevention and impeding of Money

Laundering:

• OTP Bank Plc. operates an internal control

and information system for the purpose

of preventing of banking and financial

transactions enabling or realising Money

laundering.

• OTP Bank Plc. has developed internal rules

in pursuance of the recommendation

of the Supervisory authority of Financial

Institutions, and all of its employees are

under a legal obligation to act in accordance

with the provision of these rules.

• The employees of the Bank are to be

performing their identifying and reporting

obligations.

• The performance of the reporting obligations

shall not be regarded as a violation of bank,

securities, insurance and business secrets.

• Omission of the reporting obligation

constitutes a crime punishable under

the Penal Code.

• OTP Bank Plc. cooperates with the

authorities to disclose any circumstances

relating to Money laundering.

OTP Bank Plc.’s announcement on its client-

identification procedure as set out here is

available in every premises of OTP Bank Plc.

open to clients.

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Social responsibility

the lot of disadvantaged and sick children,

on educating young people, and on improving

the living conditions and opportunities of those

living with disabilities, primarily by means

of creating and operating long-term

cooperation and programs.

The bank has had a relationship with the

International Children’s Safety Service

(Nemzetközi Gyermekmentô Szolgálat) for over

a decade. Every year this organisation provides

health services and support for more than ten

thousand children both in hungary

and abroad, caring for children with physical

and mental disabilities, orphans and other

children in need, improving their living

conditions and creating opportunities for their

future. Within the context of this cooperation,

OTP Bank primarily sponsors the organisation’s

healthcare programs; the Bank subsidizes the

medical treatment of children, helps cover the

costs of operations, and contributes to the

maintenance of a network of foster parents,

the operation of a mobile dental surgery, and

the organisation of charity events. In addition

to the direct financial support extended to the

organisation. The Bank has raised awareness

OTP Bank’s corporate mission is to deliver

high-quality products and services to all

generations and social groups, to increase

customer satisfaction by offering good value

and a high standard of service, and to maintain

personal contact with customers through the

application of modern electronic technology.

Besides helping achieve these goals, the Bank’s

sponsorship and social support activities serve

the purpose of finding and developing as many

points of contact as possible with partners

outside the realm of financial services

by supporting worthy causes, programs

and events that benefit society as a whole.

The Bank’s sponsorship and support activities

are based on two tenets: creating opportunities

and building communities. Both represent

undeniable value, and are in harmony with

the Bank’s everyday activities.

Creating opportunities

OTP Bank wishes to play an active supportive

role in the everyday lives of individuals

and society as a whole, and to help create

opportunities for success that are essential in

the face of the increasingly rigorous demands

that citizens face. For this reason, OTP Bank,

in addition to its business activities, provides

support and creates opportunities for people

in need. We give as much support as we can

to initiatives that provide opportunities for

individuals or communities, and which serve

as an example for the future.

OTP Bank, within the framework of providing

assistance and donations, focuses on improving

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among its customers of the charitable work

carried out, as a result of which significant

donations are collected from its customers

each year by means of collection boxes located

in the Bank’s branches.

OTP Bank believes that one of its key tasks

is to sponsor the development of business

training for a new generation of professionals

and to establish closer ties with institutions

of higher education.

Through the OTP Fáy andrás Foundation,

which was established in 1992 and has been

operating continuously since, the Bank aims

to expand the economic and business

knowledge and management skills of young

people, enhance their awareness of community,

and help them develop a project-centred

approach. The Foundation carries out its work

under the motto of ‘Opportunities

for a New Generation!’. although OTP Bank

finances the Foundation, independent experts

participate in decision-making as regards

the granting of support. Grants are given

by the OTP Fáy andrás Foundation on the basis

of a tendering procedure.

In January 2006, the Foundation announced

a tender for high school students to put together

the curriculum for a lifestyle and career training

program series with a business approach.

The training started in May 2006 in six high

schools of Szabolcs-Szatmár-Bereg county.

Built on student initiative and incorporating

a wide variety of visual aids, the program will

continue in additional counties starting from

the autumn of 2006.

at the beginning of the 2006–2007 school

year, the OTP Fáy andrás Foundation donated

textbooks to the students of nearly 100 high

schools that offer business studies in their

curriculum. During this initiative, the Foundation

donated some 17,000 textbooks of a value

of close to hUF 10 million to close to ten

thousand students. In addition to the textbook

donation scheme, the Foundation launched

a library expansion program in the autumn,

whereby approximately 8,500 books, CD-rOMs

and journals of a total value of hUF 15 million

were given to the libraries of 155 schools over

the month of January 2007, thus assisting

the education of tens of thousands of students

starting from the next semester.

an outstanding example of cooperation

we established with institutions of higher

education was the initiative to issue a bank card

in cooperation with the University of arts and

Sciences in Pécs, one of the largest institutions

of higher education in the country with one

of the widest offerings of research and education

programs. The bank card serves two purposes:

it gives the cardholder the feeling of belonging

to the university, and it offers discounts.

The Bank will direct a portion of its revenues

from the use of the cards to support the

university, which means that by using the cards,

students and faculty members themselves may

help support their institution.

In order to promote equal opportunities,

OTP Bank provides key support to the hungarian

Special Olympics association, the hungarian

branch of the international movement promoting

sporting opportunities for the mentally

handicapped. This is because the Bank believes

�65


that with the work of dedicated individuals and

adequate financial support, the quality of life and

present and future opportunities of the mentally

handicapped can improve tremendously.

In 2006, with the assistance of OTP Bank,

the hand in hand (Kézenfogva) Foundation

implemented a unique, large-scale nationwide

campaign to influence public opinion with the aim

of cultivating positive attitudes towards the mentally

handicapped and persons living with multiple

disabilities, helping to bring healthy and disabled

people closer together. The ‘accept it, accept me!’

road-show campaign saw a truck travelling across

the country, stopping off at 35 locations between

June and September 2006.

For the second year running, OTP Bank had the

great honour of participating in the Show Jumping

and Disabled riding Competition of the hungarian

Therapeutic horseback riding association.

By backing this event, the bank not only supports

a noble sport, but also helps promote horseback

riding as a valuable tool of therapy and

rehabilitation and a means of staying healthy for

people with disabilities, in keeping with one of the

pillars of the bank’s charitable philosophy to create

equal opportunities.

In addition to the above, OTP Bank believes

in the importance of participating in the vital affairs

of communities, and thus assigns key importance

to providing assistance in crisis situations.

accordingly, we have provided assistance on

several occasions in reconstruction work following

natural disasters in hungary, Slovakia and romania.

Building communities

OTP Bank, as a market leader in retail

financial services and the financial partner

of municipalities, has defined community

building as another tenet of its sponsorship

philosophy. The Bank believes in the

importance of community initiatives, the

preservation and handing down of community

values and traditions, and the conservation

and propagation of our national values in the

widest possible circle. In the field of culture,

this philosophy is demonstrated primarily in our

support for events that represent quality and

value to a wide circle of people, in accordance

with the bank’s diverse customer base.

In 2006, OTP Bank sponsored a special

series of exhibitions entitled ‘Geniuses

and Masterpieces’ at the Museum of Fine arts.

In addition to events nationwide, the bank also

supports regional and local events (e.g. city and

village festivals aimed at cultivating traditions),

and the bank’s sponsorship thus promotes the

strengthening of cultural traditions in various

regions of the country. Events include cultural

festivals (e.g. the Veszprém Street Music

Festival, Jewish Summer Festival, Summer

in Gyôr, Savaria historical Carnival, and Gyula

renaissance Carnival), classical music concerts

(e.g. the Miskolc International Opera Festival),

quality concerts of popular music (e.g. concerts

by Zorán or Gábor Presser), and folk music

events (e.g. the Summerfest International

Folklore Festival, concerts by the hungarian

National Gypsy Orchestra, the National Dance

house Meeting and Fair, and programs by the

Jászság Folk Ensemble). The Bank cooperates

with the most prominent regional theatres

(e.g. those of Eger, Miskolc, Sátoraljaújhely,

Székesfehérvár, Gyôr, Zalaegerszeg, Debrecen,

Nyíregyháza, Szolnok and Gyula). In addition

to regional and national events, the Bank also

supports an increasing number of cross-border

initiatives (e.g. a Zorán concert in Transylvania).

�66

OTP Bank also contributed to commemorations

of the 50th anniversary of hungary’s 1956

uprising and freedom struggle. October 23,

2006, saw the premiere of the acclaimed

film entitled ‘Freedom and love’ (Szabadság,

szerelem), made with the bank’s support.

The film commemorates the events of the

uprising by drawing a parallel with the struggles

of the invincible hungarian water polo team

in preparation for the Melbourne Olympic

Games in November 1956. On October

18 and 19, 2006, again with the support

of OTP Bank, the house of Terror Museum

organised an international conference entitled

‘The awakening of Europe,’ and inaugurated

the Wall of heroes on October 20, while an

exhibition entitled ‘Kids from Pest’ was also

opened with the sponsorship of the Bank.

The OTP history of Finance Collection also

signifies an effort to preserve values.

The collection boasts 30,000 financial

documents that have been collected by

the bank from the mid-1960s onwards.

The bank’s key task is to collect, document,

safeguard and hand down to future generations

the items in the collection, which include

written materials and objects connected with

the foundation and operation of the first

hungarian financial institutions, objects used

in the banks, office furniture and ornaments,

engravings, drawings, photographs and posters.

The end of 2005 saw the festive reopening

of the OTP Gallery, an exhibition hall dedicated

to the works of contemporary hungarian

painters. located in the entrance hall of one

of the bank’s main branches in Budapest, the

gallery displays paintings by the most prominent

contemporary artists. OTP Bank also supports

contemporary art by purchasing paintings.

Currently approximately 600 works adorn the

walls of buildings and offices used by the bank.

OTP Bank’s sports sponsorship, which involves

backing national, regional and international

sporting events and popular teams that have

a large number of supporters, once again rests


on the two main tenets of its sponsorship

philosophy: creating opportunities and building

communities. Physical and mental endurance,

a high level of concentration, boundless

discipline and accuracy are the values

represented in each type of sport that

the bank supports, just as in OTP Bank’s

own business strategy.

among the bank’s partners with which it enjoys

long-standing relationships as a sponsor are

significant domestic teams such as the MiZo

women’s basketball team of Pécs, which has

won seven gold championship medals in the

past ten years and finished among the best

four teams of the Euroleague for the third time

in 2005. It also supports the alba regia Sport

Club NB1 men’s basketball team, another

leading team, as well as the ETO handball

Club of Gyôr.

The bank sponsors additional sporting and

competitive events aimed primarily at young

people; for example, the Freestyle and

Greco-roman Women’s and Men’s Junior

European Wrestling Championship held in

Szombathely, competitions of the cadet and

junior divisions of the European Judo Union,

the hungarian Open amateur Golf Championship

organised by the hungarian Golf Federation,

as well as various world championships such

as the Junior Ice hockey World Championship

in Miskolc or competitions organised by the

hungarian Triathlon association.

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